If you’re looking to use your home to borrow money – be it for debt consolidation, home improvements, purchasing a second property, or other investments – applying with a lender is a necessary step. However, with conventional banks rejecting a large proportion of applications, you might find yourself in a difficult situation. Private mortgage lenders in Aurora cater to people whose banks have declined. These non-institutional financiers offer a viable alternative, focusing more on your property’s worth than your credit score or income. So, if you’re in Aurora and finding the mortgage landscape challenging, turning to a private lender could be your key to securing a loan.
Different Types of Lenders in Aurora
If you want to tap into your home equity or get a loan, you need to know what lenders you can work with. Many are unaware that banks are not their only option for financing. There are other lending options available. The mortgage industry classifies different types of lenders into three broad categories which include:
- A lenders—Banks are the most common type of lender in this category. They require a credit score of at least 650 and substantial household income to qualify for most mortgages. Borrowers are also put through rigorous mortgage stress tests to qualify for a bank-provided mortgage.
- B lenders—Trust companies and credit unions which require at least credit scores of 550 and are also expecting substantial household incomes and additional financial assets to qualify for mortgage financing.
- C lenders—Private lenders who can provide mortgage financing despite poor credit and non-traditional household income, such as freelance, contract-based or self-employed.
How to Get a Private Loan in Aurora
For those Aurora homeowners with poor credit, seeking private mortgage loan financing may be the route. Established private lenders assist with mortgage financing, particularly for homeowners turned down by traditional lenders.
While banks focus on credit and income, private lenders base mortgage financing on your home’s appraisal, offering alternative options. These private mortgage lenders in Aurora will base the amount of financing on:
- The current appraised value of your home.
- The location of your home.
- The current state of your property, including any fix-ups or underlying issues.
- The Loan-to-Value ratio (LTV). Calculate this ratio by taking all existing mortgages plus all proposed mortgages and dividing by the appraisal value. This ratio compares the value of the loan with the value of the home. Private lenders will approve loans with an LTV of up to 75%, meaning they will approve loans worth up to 75% of your home’s current value.
Being prepared and gathering necessary documentation is invaluable when seeking private mortgage financing. Take the steps needed to be well-informed for a potential meeting with a lender:
- A list of additional assets besides your primary residence.
- Paperwork proving all sources of monthly income, including investment income, contract income, self-employed income sources, and child/spousal support monthly income.
- A recent appraisal of your property.
- Two years of Notices of Assessment (NOA), if applicable.
- Clarity on the type of private mortgage financing you will most likely need.
Aurora’s Real Estate Market
When it comes to choosing a great place to live, Aurora can’t be overlooked. Nestled in the Greater Toronto Area, Aurora combines natural beauty with affordability and economic opportunities, perfect for small-town living.
Aurora boasts a mix of modern and historic homes in sought-after neighbourhoods like Aurora Estates, Hills of St. Andrew, and Aurora Highlands, conveniently connected to Toronto via the GO train.
In April 2018, the average home price in Aurora was $841,200. As of June 2024, homes in the city have nearly doubled in value, increasing to an average price of $1,508,180, nearly double the price only five years ago. Home values in Aurora have risen substantially, contributing to increased home equity, a valuable asset that grows with property appreciation.
Aurora homeowners likely possess substantial home equity, which serves as collateral for accessing funds without selling, albeit navigating access complexities.
What is the solution? It may be advisable to seek the help of an established and experienced private lender in Aurora. Private lenders in Aurora offer various first and second mortgage options, catering to homeowners with poor credit, high debt, or limited income. If bank approval is unattainable, private lending may be the sole option for homeowners to access necessary funds.
Explore Your Private Mortgage Options in Aurora
We have worked with lenders in Ontario’s real estate industry for over a decade. Throughout this time we have worked with and developed professional relationships with hundreds of real estate professionals and lenders across Ontario and in Aurora. We can leverage these relationships to find private lenders who can work with you.